Govt must move away from import control measures to boost economy
Production growth in Bangladesh slowed significantly in the July-March period of 2022-23 due to the global economic slowdown and gas and electricity shortages at home. According to the Bangladesh Bureau of Statistics (BBS), the average production of large and medium manufacturing units grew 9.02 per cent in the first nine months of the previous fiscal year, down from 16.5 per cent in FY22. Knitwear production levels have fallen due to slower export demand and some domestic issues.
Domestic gas and power crises contributed to slower production growth in knitwear industries. Following the fallout of Covid-19 and the Russia-Ukraine War, the global market has become unstable and sales dropped significantly. As a result, the domestic market is suffering from it. So, the reduced growth in factory output is not so bad considering the decreased demand from these two major markets. Besides, existing problems in backward linkage in the manufacturing sector are continuously contributing to low productivity.
The sectors include apparel, textiles, food products, leather and leather goods, basic metals, chemicals and chemical products, fabricated metal products sans machinery, pharmaceuticals, and non-metallic mineral products. Imports declined by about 12 per cent in the July-March period of FY23. The slower manufacturing growth is also reflected in the GDP growth estimate of 6.03 per cent for the previous fiscal year compared to 7.1 per cent in FY22.
Experts suggested that the government move away from import control measures, such as limiting or delaying opening letters of credit and selecting import products. These were correct as emergency measures to bring the current account deficit to a sustainable level, and that has been achieved. Now, it is time to let the market mechanism take care of trade and the current account balance. It appears the demand for domestic market-oriented products has declined. Without increasing manufacturing, the economic sluggishness would not wipe out.
